Massachusetts Local Pensions: Fund Count, Access, and Benefits
Public employee pensions contribute to national savings, representing 21 percent of retirement assets according to the Urban Institute. These pensions help public workers plan and live out retirement, especially the 97 percent of Massachusetts government employees who do not earn Social Security benefits through their current job. According to US DataLabs, 240,421 retired state and local government employees in Massachusetts receive public pensions, while 316,422 current employees contribute to public pension funds.
From 2005 to 2023, the number of Massachusetts pension funds receiving D and F grades went from 85 in 2005 to 0 in 2023 according to MA Datalabs. These grades are determined by the remaining years until a fund is fully funded, with D and F representing a projected funded date of over 16 years. This marks an upward trend in Massachusetts pension programs, likely fueled by a strong stock market. The most common rating was C in 2023, meaning most funds were 10 to 15 years away from full funding.
Number of Local Pension Funds
Although the fiscal stability of Massachusetts’ local pension funds is generally improving, how do they compare to other states? The Bay State ranks eighth among the states and Washington, D.C with 90 local government pension funds.
Figure 1: Number of Local Funds Per State, Massachusetts, National Average, Top Ten States, 2023. Data from Pioneer’s US DataLabs.
Although Massachusetts comes in near the top, it is only slightly above the national average of 83 local funds. Other states had a significantly greater number, including Pennsylvania (1,558), Florida (461), and Minnesota (444). Even so, pension costs differed substantially by state. Massachusetts had 1,468 fewer local funds than Pennsylvania, but administrative costs associated with running those funds were 45% less than the total for Massachusetts funds. Furthermore, pension funds in Pennsylvania paid out $378 million more than Massachusetts, yet still had lower overall costs.
Pension Beneficiaries Per Capita
Massachusetts ranks third among the 46 states with local pensions in 2023, for its number of local public pension system beneficiaries per 100,000 population.
Figure 2: Local Pension Beneficiaries Per 100k Capita, Massachusetts, DC, Idaho, 2017 and 2023 Comparison. Data from Pioneer’s US DataLabs.
In both 2017 and 2023, Massachusetts ranked third out all states with local pensions respectively. D.C ranked first in both years with 1,956 and 2,445 beneficiaries per 100,000 people, while Idaho was consistently last with four and three beneficiaries compared to the national averages of 381 and 409. In the 6-year period, the District of Columbia saw a 25 percent increase, a stark contrast to the 25 percent decrease in Idaho’s Beneficiaries while the national average increased by 7 percent. Additionally, the number of Massachusetts local beneficiaries decreased by 2.69 percent, from 1,079 to 1,050. Although Massachusetts saw a slight decline in beneficiaries, the state still ranks in the 95th percentile.
Comparatively, in 2023 Pennsylvania had 897 local pension beneficiaries per 100,000 population, while Massachusetts had 1,050.
Average Benefit
Figure 3: Average Benefit Local Pension Systems 2023, Alaska, Massachusetts, Montana and National Average
In 2023 Alaska provided local pension beneficiaries with the highest average benefit. Montana provided the lowest overall benefits. Alaska ($80,637), Texas ($77,750), Vermont ($63,191), California ($53,086), and New York ($47,267) make up the top five highest benefits while Montana ($1,779), Arkansas ($15,507), Indiana ($17,818), Oklahoma ($20,448) and New Jersey ($21,287) make up the bottom five. Massachusetts falls closer but below the national average, paying an average benefit of $33,948 or 82 percent of the national average of $41,346. Interestingly, while some states with a higher average benefit such as California and Alaska have high living costs, Texas ranks 30th cheapest cost of living according to U.S. News but still provides the second most generous benefits of any state.
Oliver Dabora is a Roger Perry Government Transparency Intern with the Pioneer Institute. He is a rising senior at the Noble and Greenough School. Feel free to contact via LinkedIn or by writing a letter to Pioneer’s office.
